Life on Loan

Life on Loan


By Maja Tuljkovic – Sarajevo

In the recent period, citizens of B&H are increasingly using the services of deferred payment, or paying in installments. They are buying food, clothing, shoes, and even perfumes in this way. Shopping centers and independent stores normally offer these services, and salespeople use the phrase ‘life on credit’ as jargon.

Salespeople have two motives. The first is to increase sales, and the second is for citizens to become their permanent clients, because they know that in certain stores there is lending. The crisis is huge and purchasing power of citizens is weak, and if the situation is realistically perceived, it will remain like this until production is increased and unemployment is reduced.

The average monthly net wage in December 2013 in the FB&H was 845 BAM. The average salary in January in the RS amounted to 810 BAM. According to data from the RS Association of Unions, the food basket for a four-member family for January 2014 amounted to 1.844 BAM, which shows that with the average salary, only 43,92% of the food basket can be provided.

The food basket includes all the products and services that are necessary for a four-member family, and that is food, utilities, ongoing maintenance, transportation, sanitation, education and culture. Most of the funds had to be set aside for food, and it is 684 BAM (around 350 Euros), and for housing and communal services it is 568 BAM (around 290 Euros).

B&H has been traditionally at the bottom of the European scale when it comes to the standard of living. Nearly every citizens of this country, if he/she receives a salary regularly, allocates 80 percent for food. According to some estimates of economic experts, if the two entities are compared, it is a bit easier to live in the RS than in the FB&H. The average wages are nearly equal, but the prices are slightly lower in the RS. However, what does not benefit the citizens of the RS is the fact that they have less of a chance for employment than citizens in the FB&H.

For one household in which there are four members of a family, the average wage is not sufficient to buy everything that is needed to survive. These families have to borrow and take deferred payment because there is no other way out. Every month their balances are in the minus, which they return from their next paychecks, and this is how they survive every month. They created a vicious cycle for themselves from which there is no escape for now.

On the other hand, shopping centers offer opportunities for deferred payment of up to 30 days, regardless of the type of goods purchased, as well as the interest-free payment of up to 12 months of installments when purchasing technology, tableware, textiles, accessories, toys and sports equipment. These are all the reasons why the number of people who use deferred payment on a daily basis increases.